SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-QSB
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2000.
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------ ------------
Commission File No. 0-27943
Promos, Inc.
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(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1209909
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(State or other (IRS Employer File Number)
jurisdiction of
incorporation)
6000 E. Evans, Suite 2-020
Denver, Colorado 80222
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(Address of principal executive offices) (zip code)
(303) 758-3537
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) had filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares outstanding of Registrant's common stock, par value
$.0000001 per share, as of September 30, 2000 were 10,033,600 common shares.
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM I. Financial Statements
Unaudited Balance Sheet at September
30, 2000 and December 31, 1999 Audited.................. 1
Statements of Operations for three
And nine months ended September 30, 2000 and 1999....... 2
Statements of Cash Flows, for the nine
Months Ended September 30, 2000 and 1999................ 3
Statements of Stockholders' Equity (Deficit)............ 4
Notes to Financial Statements ........................... 5 & 6
2
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<TABLE>
<CAPTION>
PROMOS, INC.
BALANCE SHEETS
Audited
September 30, December 31,
ASSETS 2000 1999
------ ---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................................ $ 22,138 $ 21,587
Accounts receivable, net of
Allowance of for doubtful accounts
$0 and $839x ......................................................... 11,508 10,641
Prepaid Expenses ..................................................... 680 680
Receivable, Stockholder .............................................. 636 0
-------- --------
Total Current Assets ............................................ 34,962 32,908
-------- --------
Fixed assets at cost, net
Of accumulated depreciation
Of $1,678 and $1,600x ................................................ 1,469 0
Security Deposit ................................................ 260 260
-------- --------
Total Assets ......................................................... $ 36,691 $ 33,168
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts Payable ..................................................... $ 13,342 $ 2,960
Sales and Payroll Taxes Payable ...................................... 1,219 1,487
Corporate Income Taxes Payable ....................................... 0 2,194
Bank's Line of Credit,
Current Portion ................................................. 0 6,711
-------- --------
Total Current Liabilities ............................................ 14,561 13,352
-------- --------
LONG TERM LIABILITIES: .......................................... 0 0
-------- --------
STOCKHOLDERS' EQUITY:
Preferred Stock, 10,000,000 shares
of non-voting authorized, par value
of $0.01 per share, none issued ..................................... 0 0
Common stock, par value of $.001,
per share, 50,000,000 shares authorized,
10,033,600 shares issued and
outstanding ......................................................... 10,034 10,034
Additional Paid-in-Capital ...................................... 11,785 11,785
Retained earnings (Deficit) ..................................... 311 (2,003)
-------- --------
Total Stockholders' Equity ........................................... 22,130 19,816
-------- --------
Total Liabilities and
Stockholders' Equity ................................................. $ 36,691 $ 33,168
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF OPERATIONS
For The Three For the Nine
Months Ended Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Sales .............................................. $ 44,389 $ 61,391 $ 106,636 $ 112,030
------------ ------------ ------------ ------------
COSTS OF GOODS SOLD:
Purchases and freight .............................. 36,371 31,309 61,109 60,303
------------ ------------ ------------ ------------
GROSS PROFIT .................................... 8,018 30,082 45,527 51,727
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Advertising ........................................ 3,412 235 3,683 945
Auto Expenses ...................................... 359 225 841 675
Auto Rental ........................................ 807 1,210 3,057 3,630
Delivery and Postage ............................... 98 141 490 424
Dues and subscriptions ............................. 205 195 549 771
Depreciation Expense ............................... 47 80 125 240
Employee Benefits .................................. 1,087 705 3,147 2,121
Filing and Transfer Fees ........................... 1,752 0 2,511 0
Insurance Expense .................................. 218 180 543 539
Legal and accounting ............................... 1,363 241 3,848 394
Licenses and Taxes ................................. 342 305 1,299 1,222
Office Supplies and Expenses ....................... 1,622 1,824 3,224 4,445
Officer's Salary ................................... 4,061 1,500 10,361 9,000
Rent and Maintenance ............................... 1,008 1,008 3,025 3,445
Samples ............................................ 169 410 627 612
Telephone Expenses ................................. 689 1,572 1,937 3,817
Travel and Entertainment ........................... 4,459 421 5,985 579
------------ ------------ ------------ ------------
Total Operating Expenses ...................... 21,698 10,252 45,252 32,859
------------ ------------ ------------ ------------
NET INCOME (LOSS) BEFORE
OTHER INCOME & (EXPENSES) .......................... (13,680) 19,830 275 18,868
------------ ------------ ------------ ------------
OTHER INCOME AND (EXPENSES):
Interest Income .................................... 67 4 287 11
Interest (Expense) ................................. (17) (132) (442) (476)
------------ ------------ ------------ ------------
Total Other Income and
(Expenses) ...................................... 50 (128) (155) (465)
------------ ------------ ------------ ------------
Net Income (Loss) before Provision
For Income Taxes ................................ $ (13,630) $ 19,702 $ 120 $ 18,403
------------ ------------ ------------ ------------
Provision for Income Taxes ......................... 5,036 (3,941) 2,194 (3,681)
------------ ------------ ------------ ------------
NET INCOME (LOSS) .................................. $ (8,594) $ 15,761 $ 2,314 $ 14,722
============ ============ ============ ============
Net Income Per share ............................ (.001) .002 .0002 .002
============ ============ ============ ============
NUMBER OF SHARES OUTSTANDING ....................... 10,033,600 10,000,000 10,033,600 10,000,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Nine Months Ended September 30, 2000
Common Total
Stock Additional (Deficit) Stockholders'
Number of Common Stock Paid-in Retained Equity
Shares Amount Capital Earnings (Deficit)
--------- ------------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance
January 1, 2000 .................... 10,033,600 $ 10,034 $ 11,785 $ 19,816 $ (2,003)
Net income for the
nine months ended
September 30, 2000 ................. 0 0 0 2,314 $ 2,314
---------- ---------- ---------- ---------- ----------
Balance September
30, 2000 .......................... 10,033,600 $ 10,034 $ 11,785 $ 311 $ 22,130
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2000 and 1999
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) ............... $ 2,314 $ 14,722
Adjustments to Reconcile
Net (Loss) to Cash Flow From
Operating Activities:
Depreciation .................... 125 240
Decrease in Accounts
Receivable .................. (867) 4,724
Increase in Receivable,
Stockholder ................. (636) 0
(Increase) in Prepaid Expense ... 0 (1,089)
Increase (Decrease) in Payables ... 7,920 3,549
(Decrease) in Accrued Expenses .. 0 (3,840)
(Decrease)in Bank's
Line of Credit ............... (6,711) (4,126)
-------- --------
Cash Provided (Used) By
Operating Activities ............ 2,145 14,180
-------- --------
CASH FLOWS FROM (TO) FINANCING
ACTIVITIES:
Increase in Fixed Assets ........ (1,594) 0
-------- --------
(Decrease) in Stockholders'
Loan ........................ 0 (3,924)
-------- --------
Net Cash (Used) by Financing
Activities ................... (1,594) (3,924)
Net Increase (Decrease) in Cash 551 10,256
-------- --------
CASH, BEGINNING OF PERIOD ............ $ 21,587 $ 746
-------- --------
CASH, END OF PERIOD .................. $ 22,138 $ 11,002
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
PROMOS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE I - ORGANIZATION AND HISTORY
The Company is a Colorado corporation and has been incorporated since September
24, 1992. The business purpose of this corporation is to engage in the sale of
promotional products to other business companies.
NOTE II - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
-----------------
The company record income and expenses on the accrual method.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents includes cash on hand, cash on deposit and highly
liquid investments with maturities generally of three months or less.
Sales and Expenses
------------------
Sales and expenses are recorded using the accrual basis of accounting.
Fixed Assets and Accumulated Depreciation
-----------------------------------------
Fixed assets consists of office equipment and are stated at cost less
accumulated depreciation which is provided for by charges to operations over the
estimated useful lives of the assets. The assets are depreciated over five
years.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
7
<PAGE>
Offering Costs
--------------
Offering costs of $13,031 associated with the Company's private offerings have
been charged to the proceeds of the offering.
NOTE III - AGING OF ACCOUNTS RECEIVABLE AND PAYABLE
The percentage aging of trade accounts receivable and accounts payable at
September 30, 2000 is as follows:
Accounts Receivable Accounts Payable
Current 100% 100%
30-60 days 0%
over 60 days 0%
Bad Debt Policy
---------------
The Company uses the direct write-off method for its allowance for doubtful
accounts.
NOTE IV - LEASES AND OTHER COMMITMENTS
The Company leases its premises for $366.00 per month and currently has a two
year lease from March 1, 1999 through February 28, 2001.
NOTE V - RELATED PARTY TRANSACTIONS
The Company has incurred salary expenses of $10,361.00 and $9,000.00 for
September 30, 2000 and 1999, respectively to its president. The Company also
pays auto rental for its president, this is currently $403.38 per month.
NOTE VI - LINE OF CREDIT
The Company has obtained a line of credit for $35,000.00. The interest rate
varies and is approximately 10.50 percent.
8
<PAGE>
ITEM 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion contains forward-looking statements regarding our
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward- looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude clients from using our products
for certain applications; delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.
When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. Our Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.
Costs of goods include all direct costs incurred in the process of representing
clients. The difference between our gross revenues and cost of goods is our
gross profit.
Gross profit from operations was $8,018 for the three months ended September 30,
2000, a decrease from $30,082 for the three months ended September 30, 1999.
Gross profit from operations was $45,527 for the nine months ended September 30,
2000, a decrease from $51,727 for the nine months ended September 30, 1999.
Our operating expenses increased to $21,698 for the three months ended September
30, 2000 compared to $10,252 for the three months ended September 30, 1999. Our
operating expenses were higher at $45,252 for the nine months ended September
30, 2000 compared to $32,859 for the nine months ended September 30, 1999. The
major components of operating expenses are office salaries and associated
payroll costs, general and health insurance costs, rent and telephone expenses,
as well as advertising and travel.
9
<PAGE>
Net income was a loss of $13,680 for the three months ended September 30, 2000,
compared to income of $19,830 for the three months ended September 30, 1999. Net
income was $275 for the nine months ended September 30, 2000, compared to
$18,868 for the nine months ended September 30, 1999. Earnings per share were a
negative $.001 for the nine months ended September 30, 1999 and otherwise
constant for all other periods at $.002 per share. Our revenues decreased from
$61,391 for the three months ended September 30, 1999 to $44,389 for the three
months ended September 30, 2000. Our revenues decreased from $51,309 for the
nine months ended September 30, 1999 to $45,527 for the nine months ended
September 30, 2000. The decrease in net income during the last quarter was
primarily a result expenses incurred for advertising costs and travel expenses
paid in connection with a search for a suitable acquisition candidate.
During the fiscal quarter ended September 30, 2000, we attempted to aggressively
pursued growth. Under our 1999 business plan, we began expanding sales and
revenues, both internally and through potential combinations with other
companies within our industry niche.
We began by advertising in trade publications, running 18 ads from July 2000
through October 2000.
In addition, we posted our ad on the websites of two of magazines for three
months each, Also, we developed our own website to attract additional business
and to look for potential merger/acquisition candidates (www.promosinc.net). We
have received approximately 24 responses to the advertisements, but none have
met our criteria. Most potential candidates would require substantially more
capital than we have available. In addition,the uncertain market conditions
which have prevailed over much of the year 2000 has made us reluctant to acquire
a company which would require a substantial capital investment.
In July and August, we attended two industry conventions where we met with
individuals to develop potential business relationships for our ongoing business
and for potential acquisitions. At this point, we have had little success in our
efforts and will look to expand our horizons into any potential business
relationship to enhance revenues, earnings, and shareholder value.
In looking at our current operations, we believe that we may continue to see a
slight increase in revenue as the fiscal year progresses. The advertising and
travel expenses which we incurred in the fiscal quarter ended September 30, 2000
are complete. We do not expect them to recur. We have reasonable chance to be
profitable this year.
Liquidity and Capital Resources
Cash at the end of the period increased to $22,138 for the nine months ended
September 30, 2000, compared to $10,002 for the nine months ended September 30,
1999.
Accounts receivable increased for the nine months ended September 30, 2000 to
$11,508, compared to $10,641 for the fiscal year ended December 31, 1999.
Prepaid Expenses remained constant for both reporting periods at $680.
Accounts payable increased for the nine months ended September 30, 2000 to
$13,342 compared to $2,960 for the fiscal year ended December 31, 1999.
We were profitable for the nine months ended September 30, 1999 and 2000. We
were not profitable for the fiscal quarter ended September 30, 2000. Our
revenues were lower in the most recent fiscal quarter. However, the principal
reason for our lack of profitability were extraordinary advertising and travel
expenses. We do not expect to see these expenses recur. In all cases, we try to
operate with minimal overhead. While ouur primary activity is to expand our
client base, we will be seeking acquisition candidates to attempt to expand our
operations. We have decided to expand our scope and to look for candidates in
businesses which may or may not be similar to ours. Our plan is to build our
Company in any manner which will be successful. As of the end of most recent
fiscal quarter, we have concluded no acquisitions.
10
<PAGE>
We feel that we have inadequate working capital to pursue any business
opportunities other than seeking additional clients or an acquisition candidate.
During the next twelve months, we plan to investigate an offering of our
securities, whether through a private placement or a public offering. At the
present time, we have no firm arrangements with regard to either type of
offering. We do not intend to pay dividends in the foreseeable future.
PART II- OTHER INFORMATION
ITEM 1. Legal Proceedings
No legal proceedings of a material nature to which we are a party were pending
during the reporting period, and we know of no legal proceedings of a material
nature pending or threatened or judgments entered against any of our directors
or officers in his capacity as such.
ITEM 2. Changes in Securities and Use of Proceeds.
Not applicable
ITEM 3. Defaults upon Senior Securities. None.
ITEM 4. Submission of Matters to a Vote of Security Holders. None
ITEM 5. Other Information. None.
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibit No. 27.1- Financial Data Schedule
No reports on Form 8-K were filed as of the most recent fiscal quarter.
11
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Promos, Inc.
Dated: 11/10/00 By: /s/ Judith F. Harayda
-----------------------------
Judith F. Harayda
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
CHIEF FINANCIAL OFFICER
Dated: 11/10/00 By: /s/ Stephan R. Levy
-----------------------------
Stephan R. Levy
Treasurer and Director
Dated: 11/10/00 By: /s/ Judith F. Harayda
-----------------------------
Judith F. Harayda
Director
12
